Felda begins disposal of assets to accommodate liabilities

KUALA LUMPUR (Dec 6): The Federal Land Development Authority (Felda), which is embroiled in allegations of mismanagement and mounting debts, has commenced the sales of non-strategic assets to accommodate its liabilities, says Chairman Tan Sri Megat Zaharuddin Megat Mohd Nor.

“We have started the process of selling non-strategic assets both within and outside the country and this process will probably runs until the middle or end of next year.

"It is hoped that the prices we get from the sales of these assets can accommodate our liabilities, as well as help ease the burden of settlers who are saddled with low oil palm prices," he told reporters on the sidelines of the Kolej Yayasan Felda’s convocation here today.

Megat Zaharuddin said Felda has received enquiries from potential buyers to purchase the assets, but it was not ready to reveal more information since the sales and purchase agreements needed to be approved by the government.

“We are following good governance to make sure that we give equal opportunity to interested parties. Those interested must submit their bids for the assets that they want," he said.

In September, Felda announced the disposal of its assets — including hotels, apartments and a student hostel — totalling about RM2.2 billion, which was expected to help cut its debt to RM6.5 billion by year-end, from RM8.05 billion debt recorded as at June 30.

With this in place, the government agency would be on track to become profitable again and be able to turn around in at least the next two years, Megat Zaharuddin said.

He said the sales of assets were being made to improve Felda’s cash flow, as it had taken a lot of loans from banks.

"So, we have to get a bit of cash flow from outside of what we normally do, that is through revenue from palm oil or debt repayment from settlers.

"We also have an SOP (standard operating procedure) where every settler earning less than RM1,000 was allowed to defer their debt repayment to Felda and whatever social problems encountered by the settlers, we will see how we can help them," he said.

The crude oil price recently went down to below RM2,000 per tonne due to higher production, following good weather amid lack of demand, and similar problem also bogged down edible oil producing countries in other parts of the world.

"We expect global palm oil prices will only recover next year and until then, we’ll strive to find ways to mitigate the problems soonest," Megat Zaharuddin said.

On the update of a White Paper on Felda’s strategic rehabilitation plan, he said it would be tabled in the Dewan Rakyat on Dec 10 and that the government agency had given all documents needed by the government.

“We are always in discussions with the Ministry of Economic Affairs and they have all the information needed," he said.

In August, the government said it would be presenting the White Paper to expose Felda’s real situation and chart ways to revive the beleaguered agency founded in 1956.

On the Malaysian Sustainable Palm Oil (MSPO) certification, Megat Zaharuddin said Felda aspired to abide by the rules by getting all of its plantations 100% MSPO-certified next year, from 42% at present. — Bernama